In a basic loyalty program, the retailer-issued loyalty card allows customers to accrue and redeem points, encouraging the customer to return, i.e. creating and then rewarding loyalty. The program tracks the purchases the consumer makes, and lets them accumulate points at a specified rate per amount spent, on all, or specific, purchases. The accrued points are directly converted into a cash reward, which can be spent with the issuing retailer. Typical reward schemes of this type allow the points to be redeemed at any time, after a certain level has been reached. While these programs offer many benefits to retailer and customers, Ogloba’s flexible solutions allow loyalty programs to be used in more innovative ways.
What is a Delayed Discount?
In a delayed discount scheme, the loyalty card program can be configured so that the accrued reward can only be redeemed after a certain future date, and then only for a limited period. For example, let us imagine a promotional campaign in which customers receive a 20% discount card in December, but one that does not offer an immediate discount. The card allows 20% of the value of December purchase(s) to be accrued and credited. However, the credited amount can be used in February, a month during which fewer people come to the store. For example, if the customer spends $500 in December, they will earn $100 (20% of the original spend) which they can then use in February. In essence, the discount card is a limited-time loyalty card as it encourages the customer to take advantage of the 20% discount promotion either by making a single large purchase, or several purchases, during the promotional period.
How does this benefit the retailer?
There are a number of advantages to this kind of reward scheme. While the customer will be encouraged to spend more during December as the 20% discount promotion gives them “a good deal”, no discount is given at the time of purchase (the customer still pays $500 for their goods) and therefore, the retailer receives the full value for the goods purchased.
As the discount is given as credit, the returning customer can only take advantage the reward by making more purchases from the issuing store. Customers redeeming gift cards and store credit often see them as “free money” providing a “minimum spend” threshold, so customers holding the discount-derived credit are actually likely to spend more than the (in this example) $100 of credit. The amount over the $100 is profit the merchant would not have gained had the customer not been tempted to return to the store by the delayed discount promotion card.
The promotion creates a positive buzz around the retailer, and is a great way of marketing the retailer’s brand and attract new customers. These customers are more likely to become repeat (loyal) customers if they can be tempted to return to a store soon after their first visit. This is achieved because, as the credit accrued from the discount promotion is valid only for a limited period, customers are forced to return soon after their last visit if they wish to take advantage of the reward.
It should also be remembered that even if customers do not return to spend their credit, the retailer does not lose. The customer originally paid full price for the goods they purchased in December, and come February they are not taking advantage of the bonus (free) credit, and goods, they have accrued.
How does Ogloba do it?
At Ogloba, we ensure that our solutions are the most reliable they can be, but also simple for our clients to implement and manage. For delayed discount, we use gift cards with $0 credit and load the $ (cash) counter with x% of the value of December purchases which, can then be spent at a specified future date. In the example above, in would work like this: the customer would be issued a promotional card with no monetary value, but when they buy $500 worth of goods, 20% of the value of that purchase ($100) is added to the card as cash value. The client would have pre-configured the cards so that the loaded value is only valid for use in February.